Unemployment Data Does Little to the Pound

A volatile start marked early trade in London as a recovery in the mining sector managed to offset falls for BAE Systems and Cable & Wireless. After a weak start, the FTSE 100 recovered to trade 10.6 points, or 0.2% higher at 5,529.3. Leading the blue-chip fallers, BAE was hit by news of fresh delays in the delivery of the Airbus A380. The delays could cost European aerospace giant EADS €2bn in 2007 just as it looks to buy out Airbus stakeholder BAE, leading to concerns it may try to renegotiate its price. Shares in BAE were down 4.5% at 332¾p in early trade. The mid-cap FTSE 250 rose 40 points, 0.5% to 5,530.9, led by Associated British Ports after it was reported to have accepted a £2.5bn takeover offer from a Goldman Sachs led consortium. AB Ports gained 7.1% to 834p after Admiral Acquisitions, the group led by Goldman, offered 810p per share in cash for Britain's largest ports group. A first quarter trading update from Tesco was weaker-than-expected, sending shares 1.4% lower to 325½p. The supermarket chain said same-store-sales increased 4.5 percent excluding petrol and it was on track to for the largest slate of new store openings this year. Cable & Wireless lost 2.4 percent to 110p as the shares traded without the right to the latest dividend payout. On the upside, miners were stronger as bargain hunters bought into the sector which has performed particularly badly over the last few days. Rio Tinto increased 2.5% to £26.11 despite continued weakness in the copper market, while Xstrata was up 2.4 percent at £18.60.

Ten year gilt future yields were increased two basis points to 4.525% as prices slipped to 95.730.